Medicaid Prospective Payment System

Traditionally, Federally Qualified Health Centers (FQHC) were reimbursed based on their costs. That changed in 2000, with passage of the Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act (BIPA).

It put in place what is called the Prospective Payment System (PPS). It also allowed states to use an alternative payment method (APM), but only if the health centers agreed to it and only if the state payment method didn’t pay health centers less than what they would have gotten under the federal PPS.

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State Policy Report#4
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A Closer Look: Surverys of Primary Care Associations and State Medicaid Agencies Provide Insight on the Implementation of Medicaid Prospective Payment System for Health Centers